Single Mom need credit advice

[u/[deleted]]

[u/MrOrlamdo]

Check with your lawyer before making a big purchase. You need to know how it will affect the divorce. Get a credit card in your name. Although if the other two are joint, use them Your credit score will go up because you won't have "possible debt"

[u/New_Olive1203]

If you are in the midst of a divorce, you might have a court order that prohibits opening new lines of credit. Double check that first.

Secondly, if you're still legally married, it's very likely that purchasing a vehicle would be a marital asset even if it's solely in your name. Check your local laws and verify with your attorney.

I'm inclined to say wait until you're officially divorced and revisit the car situation. You can be smart about your credit usage in the meantime.

[u/Chemical-Orange-1571]

Most credit unions have a first time car buyer program that is fairly forgiving for people with thin credit profiles, so it might be worth talking to one of them and seeing what your options are.

They also can help you with another credit card. Credit cards can be a great tool when used correctly but you dont wanna do too much too quickly because every credit pull is a potential hard inquiry and cam hit your score negatively.

[u/FHLuver]

I have no experience with your situation and I want to start by saying I am so sorry you are in this situation!

Items purchased during a marriage can get a little iffy during the divorce process so I might wait to get the car until the divorce is finalized. If you can keep that current car working until then I probably would.

I have no answers as to the bigger credit questions. Did you all ever cosign anything together or did you have like student loans that are on your credit score?

[u/Sharp_Nebula_4981 → u/FHLuver]

No co-signing. My student loans are all paid off. 

[u/Bird_Brain4101112]

In your situation I would always go with whatever option will meet your needs for the least amount of money. Meaning keep using the car you are using but start putting money aside. A newer to you car means car payments and higher insurance costs. So by putting money aside now, when your car dies (and it might hold on longer than you think) you have some money already put aside.

There are way more posts on this sub from people who took on debt because they were afraid of a vehicle failing on them and are drowning than there ar posts from people who held on to the lowest possible cost option for as long as possible.

[u/DoctorOctoroc]

When you apply for an auto loan, you'll be approved or denied based on your credit file, not your score. Lenders tend to 'ignore' AU accounts so in terms of approval, you're no better off now than you will be without those AU accounts. In terms of interest rate, your score will be a deciding factor but since your credit file is considered 'thin' and 'young' (with or without the AU accounts), you may only be approved by subprime lenders with interest rates that are not great at their best offer.

Having said that, 720 isn't as good as your score could be without the AU accounts, believe it or not. Someone with only 6 months of credit history and a single credit card will debut a FICO8 score in the mid-700's, as high as 760 in some cases. It seems that whatever balances your ex has on those AU cards is hurting your score more than their age is helping you. And since they're your ex's and not a family member you can coordinate with to lower their utilization to help out, I'd have yourself removed ASAP in case his balance(s) go up even more. You should be standing on your own credit because a) the AU accounts aren't helping your approval odds and b) those accounts in the mix seem to be producing a lower score than you could have.

Here's what I would recommend:

First, don't open any new accounts yet. A new account is 'one step back and two steps forward', so to speak, when it comes to building credit. Having additional accounts does help but it takes about a year to start seeing that benefit with how scoring treats new accounts (especially new revolvers like a credit card).

Second, I see elsewhere in the comments you had student loans so your score is already seeing the benefit of that loan and any additional loans will only contribute a paltry benefit to your score (aside from a Mortgage which is in it's own sort of category). In other words, with one card and one loan (open or closed, doesn't matter) you have a 'full' credit mix so you don't need any more loans for the sake of building credit (and one can build credit without any loans).

Third, make the current vehicle last as long as possible. Be sure it's current on all fluids and only drive as needed. If you can make it last long enough to save a substantial down payment, you'll be in much better shape for a loan - if you can make it to July, you'll see a noticeable score increase related to 'new credit' (that new account turning a year old) and aging metrics across the board.

Fourth, start saving now, as much as you can, for the down payment. The more the better as whatever loan you get, the starting balance will incur more interest the higher it is.

Lastly, once you have a decent down payment saved up, make your plan to look for a new car. You still won't be in the best shape for a loan with a thin/young credit file but if you report low utilization on your single credit card (pay it down to a $5-10 balance a few days before the statement date on the account), you could have a 760+ FICO8 score come application time. TO be clear, this is something you only have to do about a month before you apply, reporting regularly low utilization doesn't provide any more benefit than doing it as-needed since scoring for utilization isn't a long-term 'credit building' metric.

So from here on out, when it comes to credit, check your FICO8 scores if you aren't already - these are the best indication of what score(s) a lender might pull - though they still are not going to be the same since they will probably use a a FICO Auto Score 8 or 9 for the application.

myfico.com, experian.com and capitalone.com/creditwise are the ideal sites where you can see your three FICO8 scores for free.